Trump’s ‘run it hot’ economic strategy could work — but it’ll cost Americans dearly
Trump’s ‘run it hot’ economic strategy could work — but it’ll cost Americans dearly
https://www.cnn.com/2026/01/23/business/economy-hot-americans-ai-trump
Publish Date: 2026-01-23 05:00:00
Source Domain: www.cnn.com
Here is a summary of the key points from the article using an unordered list:
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“Run it hot” theory: There is a theory within the Trump administration and parts of Wall Street that imagines rapid economic growth combined with low inflation, akin to the productivity boom of the 1990s driven by the internet.
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Comparison to the 1990s: The theory posits that AI will similarly boost productivity, leading to high business growth and surging stocks while keeping consumer prices stable, similar to how the internet impacted the economy in the 1990s.
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Trump Economic View: Economic adviser Kevin Hassett advocates for maintaining low interest rates citing strong GDP growth and stability in inflation, drawing parallels to the “run it hot” theory of the 1990s.
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K-shaped economy: Currently, the U.S. economy shows strong growth, but it’s driven by spending primarily from the top 20% of earners, creating a disparity where the majority of people face rising costs and economic struggles.
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Key risks:
- Uncertain adoption of AI technology as not all people are enthusiastic about using it.
- Economic disparity: the economy’s seeming prosperity on paper does not reflect the struggles of the majority; true economic improvement is needed for public perceptions to shift.
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Possible Outcomes: If AI replaces labor significantly with software, it could lead to mass layoffs, complicating the ability of the Federal Reserve to manage economic fluctuations with already low interest rates.
